Saudi Wins Out, Opec Switches To Group Ceiling

A mammoth week of negotiations culminated in Opec’s sparring members effectively agreeing to release an extra 500,000 b/d onto global markets on 22 June. Individual country allocations have been replaced by a group-wide ceiling that will permit the stronger members to capitalize on falling output from the weaker countries.

Always a two-tier organization, the differences between Opec’s haves and have nots is growing.

Nevertheless, Opec Secretary General Mohammad Barkindo appeared happy with the day’s work. Having given the post-meeting press conference a thumbs up upon his entrance, he proceeded to label 22 June as “one of those landmark conferences.”

Curiously, much anticipated resistance from Iran appears to have dissipated during the 22 June meeting. Iran and Venezuela look to be the biggest losers from the agreement, with the imposition of fresh US sanctions on each likely to push their output down.

Meanwhile Saudi Arabia, the UAE and Kuwait appear the only Opec members capable of increasing production substantially. They will be joined in increasing production by non-member Russia following the non-Opec meeting on 23 June. (CONTINUED - 1721 WORDS)


table 1: Opec Wellhead Production, May 2018 (Mn B/D, Mees Estimates)
chart 1: Saudi Oil Exports (Mn B/D): Crude Exports Up In 2018 As Refined Products Exports At Record Highs (Mn B/D)
table 2: Opec 2017 Oil Export Revenues Rose A Massive $125bn, 2018’s Gains Could Be Greater ($Bn)
chart 2: Opec's 2018 Oil Export Revenues On Track To Rise Almost $300bn From 2016's Low ($Bn)